Correlation Between SSH Communications and Tulikivi Oyj

Can any of the company-specific risk be diversified away by investing in both SSH Communications and Tulikivi Oyj at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SSH Communications and Tulikivi Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SSH Communications Security and Tulikivi Oyj A, you can compare the effects of market volatilities on SSH Communications and Tulikivi Oyj and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SSH Communications with a short position of Tulikivi Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSH Communications and Tulikivi Oyj.

Diversification Opportunities for SSH Communications and Tulikivi Oyj

0.72

Correlation Coefficient

SSH Communications  Tulikivi Oyj

Poor diversification

The 3 months correlation between SSH and Tulikivi is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SSH Communications Security and Tulikivi Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tulikivi Oyj A and SSH Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SSH Communications Security are associated (or correlated) with Tulikivi Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tulikivi Oyj A has no effect on the direction of SSH Communications i.e., SSH Communications and Tulikivi Oyj go up and down completely randomly.

Pair Corralation between SSH Communications and Tulikivi Oyj

Assuming the 90 days trading horizon SSH Communications is expected to generate 5.7 times less return on investment than Tulikivi Oyj. In addition to that, SSH Communications is 1.2 times more volatile than Tulikivi Oyj A. It trades about 0.02 of its total potential returns per unit of risk. Tulikivi Oyj A is currently generating about 0.16 per unit of volatility. If you would invest  41.00  in Tulikivi Oyj A on December 31, 2024 and sell it today you would earn a total of  8.00  from holding Tulikivi Oyj A or generate 19.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SSH Communications Security  vs.  Tulikivi Oyj A

SSH Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SSH Communications Security are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, SSH Communications is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Tulikivi Oyj A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tulikivi Oyj A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Tulikivi Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SSH Communications and Tulikivi Oyj

The main advantage of trading using opposite SSH Communications and Tulikivi Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSH Communications position performs unexpectedly, Tulikivi Oyj can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tulikivi Oyj will offset losses from the drop in Tulikivi Oyj's long position.

The idea behind SSH Communications Security and Tulikivi Oyj A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.